Office of Management and Budget Click to print this document

June 9, 1999
(House)


H.R. 1401 - National Defense Authorization Act
for Fiscal Year 2000

(Spence (R) SC and Skelton (D) MO)

The Administration supports prompt congressional consideration of the national defense authorization bill for FY 2000, and appreciates the Committee's support for many of the President's national defense priorities. However, as the President indicated in his May 25th letter, he would veto the bill if it included section 1006, which would prohibit the use of fiscal year 2000 funds authorized by this act for funding the Kosovo mission.

There are other similarly unacceptable provisions either in the Committee bill or made in order in the rule. These include several Kosovo floor amendments that would constrain the ability of the President to carry out his foreign policy and Commander in Chief responsibilities and the Ryun amendment, which would seriously undermine U.S. national security interests by imposing a 2-year moratorium on the Department of Energy's foreign visitors program, effectively killing programs such as one that helps secure hundreds of tons of nuclear fissile material in Russia from theft by terrorists or rogue states.

In addition, the Administration strongly opposes several provisions related to Security at the Department of Energy (DoE). The Departments of Defense and Energy strongly oppose the Spence amendment which would transfer the Department of Energy's national security functions to the Department of Defense. This proposal has been examined by several high-level review groups over the years, and has been rejected every time primarily because this transfer would result in reduced senior management attention to critical national security issues. Similarly, Section 3165 of the bill would codify the organization of DOE's Defense Programs in a manner that would undermine national security objectives.

The Administration strongly supports the Skelton amendment, which would strike the prohibition contained in section 1006.

H.R. 1401, as reported by the House Armed Services Committee, also raises other serious budget and policy concerns, which are outlined below.

Funding Levels

The Administration opposes the funding increases for defense base programs proposed in the reported version of H.R.1401. The President's defense budget provides a $9 billion increase over the FY 1999 enacted level, excluding emergencies. The President's budget ensures that critical readiness needs are met, allows for weapons modernization and proposes an appropriately generous military compensation plan, while ensuring that other critical U.S. priorities receive sufficient funding. The House bill, in contrast, would result in $8 billion more in total spending for defense than the $280.8 billion requested in the President's budget, potentially draining critical resources from other programs. We believe H.R. 1401 must be considered in the context of deliberations on a comprehensive budget framework that addresses Social Security, Medicare and all discretionary spending. For these reasons, the Administration opposes the base funding levels of H.R. 1401.

Base Realignment and Closure (BRAC)

The Administration is disappointed that the bill fails to support the Department of Defense's proposal to authorize two additional rounds of base closure and realignment. Defense's base infrastructure is far too large for its military forces and must be reduced. The failure to downsize Defense's base infrastructure proportionately is apparent in the fact that since FY 1989 force structure has been cut 36 percent compared to only 21 percent in base structure through four BRAC rounds. Future BRAC rounds are critical to secure funds for readiness, modernization, and quality of life priority programs and to allow the Department to reshape its base infrastructure to match changing mission requirements for the 21st century.

Military Pay and Benefits

While the Administration is pleased that H.R. 1401 endorses the key elements of the President's plan to improve military compensation, we are concerned about the excessive costs of the committee's bill. The Administration is concerned that the bill's military pay increases exceed the Defense program for FY 2000-2005 by $1.4 billion and that its retirement reform would be significantly more costly in the long run than the Administration's proposal. The Administration is also concerned that the bill would create disparity with civilian pay raises.

Contracted Advisory and Assistance Services (CAAS)

The Administration strongly opposes Section 901, which places a limitation and a $100 million reduction on the amount of funding for acquiring CAAS. Growth in CAAS is the natural outcome of Administration efforts to contract for services that can be performed more efficiently in the private sector. The Defense Department should not be penalized for more accurate reporting of contracted services, for increasing its use of the private sector, and for pursuing management efficiencies and improvements.

Cooperative Threat Reduction

The Administration opposes language that prohibits the use of Cooperative Threat Reduction (CTR) funds for the construction of a chemical weapons destruction facility. Terminating this project risks preservation of the threat posed by Russia's most modern chemical weapons and lowers Russia's ability to comply with the Chemical Weapons Convention. In addition, H.R. 1401 would provide no new funds for the CTR defense and military contacts program, curtailing a key vehicle to enhance defense dialogue and cooperation with the New Independent States and promote demilitarization there. Therefore, full funding should be restored to these vital programs.

Strategic Force Structure

The Administration opposes Section 1033 which restricts funding for retiring or dismantling strategic nuclear delivery systems. We believe this legislation would unnecessarily restrict the President's national security authority and ability to structure the most capable, cost-effective force possible. In particular, the requirement in paragraph (3) for DoD to maintain 98 percent of the maximum number of warheads legally allowed under START I would unnecessarily restrict the ability to make appropriate changes in the force over time. Finally, the bill's language is unclear in that it links two separate and distinct metrics, the maximum warhead capacity of US strategic nuclear delivery systems and the START I limit of 6000 accountable warheads (which is calculated on the basis of treaty counting rules).

Declassification of Records at DOD

The Administration strongly objects to Section 1031, which limits operations and maintenance spending for declassification to not more than $20 million during fiscal year 2000. This cut of about 90 percent from the President's request would cripple the President's effort to declassify information which has lost its national security sensitivity and is over 25 years old. Declassification of older information has two obvious benefits. First, it reduces high safeguarding costs and, second, it enhances security by ensuring that secrecy is respected and reserved for only the most important secrets. Moreover, the cut would place sensitive information at risk by providing inadequate resources to perform for statutorily required declassification reviews, e.g., in response to requests pursuant to the Freedom of Information Act.

Chemical Demilitarization Program

Although the Administration supports the committee's efforts to find ways to reduce the cost of the Chemical Demilitarization Program, a reduction of $157 million, prior to identification and implementation of cost-saving measures, is problematic. A reduction of this magnitude will cause a breach in the Chemical Weapons Convention deadline for the destruction of these chemical weapons. Furthermore, the reduction will increase life-cycle costs and increase the risk to local communities surrounding the chemical storage sites as the destruction of these chemical agents is delayed. The Administration strongly urges the House to fully authorize the Administration's $1.169 billion request.

Acquisition and Technology Management

The Administration appreciates the effort of the Committee to support our proposal to strengthen DoD's logistics function. However, section 902 establishes two Deputy Under Secretaries at the same level, with neither as the principal, interferes with the management prerogatives of the Secretary, and is contrary to the sound organizational structure previously established by Congress. We recommend revision of section 902 to conform to the Administration's proposal.

Acquisition Workforce Reduction

The Administration objects to Section 904, which would require the Secretary of Defense to reduce the workforce in acquisition organizations arbitrarily by 25,000 persons in FY 2000, because of its adverse affect on readiness and the efficiency of the acquisition system. Further, it could result in delays in development or delivery of much-needed material to operating forces. The Department is on an orderly course to reduce the acquisition workforce and has already proposed a reduction of nearly 16,000 positions for FY 2000. The end result of the Administration's plan would be a reduction of nearly 60 percent of the acquisition workforce as defined in the legislation.

Long-Term Leases of Navy Ships

The Administration opposes section 1014, which would allow the Secretary of the Navy to enter into long-term leases for certain newly constructed ships. Rather than requiring full, up-front funding to acquire these ships, the provision would enable the Navy to make annual payments for the leases. Leasing is always more expensive in the long-run than direct purchase because the government's cost of financing is always less than private financing; the most beneficial method of acquiring new ships to meet Defense's requirement would be to procure them outright. Pursuant to Budget Enforcement Act scoring rules, any subsequent legislation that authorizes the Department to lease specific vessels will be scored according to the lease-purchase scoring rules.

Congressional Notification of Compromised Classified Information

The Administration opposes Sections 1032 and 3166, which require written reports within 30 days of an alleged compromise of security. These requirements do not permit adequate investigation or protection of the information, and consequently could seriously jeopardize investigation by the appropriate criminal or counterintelligence investigative organizations and prosecution of perpetrators by the Department of Justice or military prosecutors. The Administration would like to work with the Committee to ensure that this and other problems are addressed.

Department of Energy Programs

The Administration is pleased with the overall funding level for Department of Energy's (DOE) national security programs in H.R. 1401, which is nearly the same as the President's request. However, the following reductions from the request are objectionable: $63 million less for Arms Control activities that will severely limit vital nonproliferation projects in Russia and elsewhere; $18.7 million less for International Nuclear Safety; $30 million less for education programs of the Office of Defense Programs; and $40 million less for program direction activities of the Offices of Environmental Management, Defense Programs, and Nonproliferation and National Security. The bill would provide $30 million, which was not requested, for DOE to establish a new ballistic missile defense research and development (BMD R&D) program and would also impose a three percent tax on funding for all DOE national security programs to use for additional BMD R&D.

The Administration opposes the provision that places a 25 percent spending limit of the Initiatives for Proliferation Prevention (IPP) funding at DOE Laboratories. The Department intends to significantly reduce the amount of IPP funds spent at DOE labs, but the 25 percent limit would hinder DOE's ability to assure that IPP program support to Russian scientists is not misused.

The Administration is concerned that extending the period that congressional committees have to consider DOE reprogramming requests from 30 to 60 days would seriously reduce the Administration's flexibility to run its programs.

TRICARE

The Administration will oppose any amendment that would expand the TRICARE Senior Prime demonstration pilot project to additional sites or make the pilot project permanent in duration or national in scope. The TRICARE Senior Prime demonstration has not yet been evaluated, as required in the Balanced Budget Act, and the expansion of the pilot project could lead to a significant increase in Medicare costs at a time when reforms are being proposed in order to preserve the Medicare trust funds.

Performance of Functions by Private Sector Sources

The Administration appreciates the need to properly identify opportunities for competition between the public and private sectors but objects to provisions that require the Secretary to collect contractor employment and other economic impact data that would impose administrative burdens on the Department's competitive sourcing program. The proposals require the development of special data collection systems, including the collection of information from DOD prime contractors and their subcontractors of information that is not needed in the administration of these contracts or in the evaluation of workload. Moreover, the Administration would oppose any other provision that seeks to add administrative burdens on competitive sourcing, reinvention and privatization initiatives.

Procurement Reform

The Administration urges incorporation of our proposed provisions that would further improve the acquisition process and its ability to support the Defense mission through, among other things, reductions in government-unique accounting requirements and taking greater advantage of electronic commerce.

The Administration will continue its review of the bill and the amendments made in order by the rule and may identify other issues. The Administration looks forward to working with congressional leaders to forge a strong Authorization Act for FY 2000.


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